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Bargain hunters looking to snap up foreclosed homes found prices dipped again in the first quarter, with Ohio and Illinois offering the steepest discounts, according to figures released earlier this week by RealtyTrac. But if you're getting ready to you whip out your checkbook, you may want to wait even longer.

During the first quarter, homes foreclosed by banks or in various stages of foreclosure accounted for 28% of all residential sales in the U.S. That's slightly up from 27% in the previous quarter, slightly down from 29% a year ago.

"At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks' books, or in foreclosure," says James Saccacio, RealtyTrac CEO, in a statement.

Foreclosures tend to dampen the value of neighboring homes, which in part explains the 3% decline in value that hit U.S. homes in the first quarter, according to the Zillow Home Value Index. And the folks at Zillow recently revised their forecast of when U.S. homes would likely see their falling values bottom out, moving the bar from later this year to 2012 -- at the earliest.

The price of a home in some stage of foreclosure is getting cheaper, according to RealtyTrac. During the first quarter, the average sales price was $168,321 -- down 1.89% from the previous quarter and a decline of 1.46% compared with a year ago.

And when comparing the sales price of foreclosed homes to homes that were not in foreclosure, the discount widened a tad during the first quarter, compared with a year ago. The discount grew to nearly 27% in the first quarter, compared with a 26% a year ago.

But in Ohio and Illinois, the average discount was a whopping 41% in the first quarter, higher than last year by 1 and 3 percentage points, respectively.

Other states with fire-sale discounts in the low to high 30% range include: California, Delaware, Georgia, New York, Oklahoma, Pennsylvania, Tennessee, Virginia and Wisconsin.
An Improvement from Recession Numbers

"While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties were sold to third parties," Saccacio said.

During the first quarter, 158,434 homes in various stages of foreclosure or bank-owned (REO) homes were sold to third parties, down 16% from the previous quarter and a drop of 36% from a year ago.

Nevada was the hardest hit. As in previous quarters, a majority of the homes sold in the Silver State (53%) were going through the foreclosure process or already been foreclosed on, according to RealtyTrac. But the numbers were slightly better than in previous quarters. Foreclosure sales accounted for 54% of the transactions in the fourth quarter and 59% a year ago.

California and Arizona were not far behind. Of all the residential transactions handled in both states during the first quarter, foreclosure-related sales accounted for 45% of the transactions in both California and Arizona.

Scammers Converge on California

But it's California that's attracting a horde of foreclosure scam artists, according to a report released Thursday by the Homeownership Preservation Foundation, an independent national nonprofit advisory organization.

California homeowners represented 22% of the calls to HPF's hotline, where folks can report cases where they believe they've been approached or were a victim of a foreclosure rescue scam. Florida came in a far distant second, with only 7% of the hotline calls, followed by Texas and New York which each had 5% of the calls.

"Although California was among the states most hard hit by the housing crisis, the reported foreclosure rescue scam activity seems disproportionately higher than we would have expected," says Colleen Hernandez, HPF's CEO, in a statement. "It's also surprising that the scam activity is so widely dispersed [throughout the state] rather than concentrated in areas or regions with the highest foreclosure rates."

Homeowners who find themselves in a financial bind should take note that the Federal Trade Commission in February began prohibiting companies and individuals from charging upfront fees to negotiate mortgage reduction plans on behalf of the homeowner. Despite that new FTC rule, HPF warns companies and so-called mortgage rescue experts continue to charge upfront fees that average $2,589 a pop - often without delivering any relief or doing any work.

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After our most recent tax cut enacted in 2003, federal tax receipts grew in each of the successive 5 years, totalling a whopping 43% cumlative gain through 2008. But you wouldn't want to confuse yourself with any facts, would you?

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